Federal Reserve Credit declined $33.2bn last week to $2.116 TN. Fed Credit
has declined $131bn y-t-d and $82.5bn over the past 52 weeks. Elsewhere, Fed
Foreign Holdings of Treasury, Agency Debt this past week (ended 11/11) increased
$6.9bn to a record $2.917 TN. "Custody holdings" have expanded at an 18.4%
rate y-t-d, and were up $409bn over the past year, or 16.3%.

Total Commercial Paper outstanding slumped $76.7bn (13-wk gain of $164bn)
to $1.239 TN. CP has declined $443bn y-t-d (30.4% annualized) and $364bn over
the past year (22.7%). Asset-backed CP declined $4.7bn last week to $510bn,
with a 52-wk drop of $231bn (31.2%).

International reserve assets (excluding gold) - as accumulated by Bloomberg's
Alex Tanzi - were up $749bn y-o-y to a record $7.517 TN. Reserves have increased
$752bn year-to-date.

Global Credit Market Watch:

November 13 - Bloomberg (William Selway): "U.S. state and local governments
sold $9.5 billion of bonds this week, led by California, as demand from investors
allowed Connecticut to almost double the size of its offering of tax-exempt
securities."

November 10 - Bloomberg (Laura Cochrane and Esteban Duarte): "Islamic bond
issues surged this year as offerings from governments and state-related companies
fostered a more efficient market, according to Moody's... Global sales of so-called
sukuk that comply with Islamic religious laws increased 40% in the 10 months
to October... Moody's... Faisal Hijazi... wrote..."

November 9 - Bloomberg (John Fraher and Shobhana Chandra): "The International
Monetary Fund signalled record low U.S. interest rates are funding global 'carry
trades' and the dollar is still overvalued as concerns mount that new financial
imbalances are forming. 'There are indications that the U.S. dollar is now
serving as the funding currency for carry trades,' the IMF said... 'These trades
may be contributing to upward pressure on the euro and some emerging-economy
currencies.'"

November 11 - Bloomberg (Scott Lanman and Craig Torres): "The Federal Reserve
faces the biggest blows to its authority and independence in five decades under
legislation championed by its lead overseer in the U.S. Senate. The financial-regulation
overhaul proposed yesterday by Senator Christopher Dodd would strip the Fed
of its role as a bank supervisor and give Congress a greater voice in naming
the officials who set interest rates. The measure opens the door to interference
from politicians who might disagree with any move by the Fed to raise rates
from record lows, former central bank officials said."

November 12 - Bloomberg (Alison Vekshin and Robert Schmidt): "Seven Wall Street
lobbyists trooped to Capitol Hill on Nov. 9, hoping to convince Representative
Paul Kanjorski's staff that his plan to dismantle large financial firms was
a bad idea. They walked out with a sobering conclusion, according to the accounts
of two attendees who requested anonymity because the meeting was private. Not
only was Kanjorski serious, he planned to offer the legislation as early as
next week -- and it just might pass."

Global Government Finance Bubble Watch:

November 12 - Bloomberg (Mike Gavin): "Germany's budget deficit will reach
5.1% of gross domestic product in 2010, from 3% this year, according to a forecast
by the government's council of economic advisors..."

November 12 - Bloomberg (Dara Doyle and Ian Guider): "The biggest financial
gamble in modern Irish history is about to exit the realms of theory and enter
the real world. Lawmakers will today pass a bill creating a so-called bad bank
that will pay the country's biggest banks 54 billion euros ($81 billion), or
about a third of gross domestic product, for property loans to free up lending...
Real-estate prices have on average dropped 50% since peaking in 2007..."

Currency Watch:

November 13 - Bloomberg (Oliver Biggadike and Matthew Brown): "Brazil, South
Korea, Russia and other developing nations are fighting a losing battle to
mute gains in their currencies as a falling dollar and economic recovery create
more demand for their assets than central banks can handle. South Korea Deputy
Finance Minister Shin Je Yoon said... the country will leave the level of its
currency to market forces after adding about $63 billion to its foreign exchange
reserves this year... Chile Finance Minister Andres Velasco said... that lawmakers
approved an increase in local debt sales to finance spending, a move that will
allow the government to keep more of its dollar-based savings overseas and
slow the peso's rally. Governments are amassing record foreign-exchange reserves
as they direct central banks to buy dollars in an attempt to stem the greenback's
slide..."

November 10 - Bloomberg: "China, rejecting calls from Europe and Japan, will
keep the yuan from gaining against the dollar until exports revive, state researchers
said. Policy makers are unlikely to allow the currency to resume its appreciation
this year after keeping it almost unchanged since July 2008... Zhu Baoliang,
the chief economist at the State Information Center, said... China will stick
with its 'tough stance' on the currency, Zhang Ming, a researcher at the Chinese
Academy of Social Sciences, said..."

November 11 - Bloomberg (Rebecca Christie): "U.S. Treasury Secretary Timothy
Geithner said a strong dollar is in the nation's interest and the government
recognizes the importance it plays in the global financial system. 'I believe
deeply that it's very important to the United States, to the economic health
of the United States, that we maintain a strong dollar,' Geithner told reporters..."

The dollar index declined 0.7% to 75.25. For the week on the upside, the Mexican
peso increased 2.8%, the New Zealand dollar 2.5%, the Canadian dollar 2.3%,
the Swedish krona 2.2%, the South African rand 1.6%, the Australian dollar
1.5%, the Norwegian krone 1.4%, and the Taiwanese dollar 0.9%. On the downside,
the Brazilian real declined 0.1%.

Commodities Watch:

November 9 - Bloomberg (Daniel Williams and Mahmoud Kassem): "China promised
$10 billion in cheap loans to Africa, pledged to cut customs duties and distributed
a newspaper with photos of Chinese leaders among beaming Africans, part of
an effort to fight claims it is exploiting the continent's resources. At the
close today of the two-day Forum on China-Africa Cooperation conference in
Sharm el-Sheikh, Egypt, China pledged to 'work within its means to increase
aid to Africa, reduce or cancel debts on African countries, in addition to
increasing investments in Africa and open more markets,' Egypt's state-run
Middle East News Agency reported."

November 9 - Bloomberg (Alan Bjerga and Jeff Wilson): "China's corn harvest,
the world's second-largest, plunged by a more-than-estimated 13% to a four-year
low because of droughts in the main growing regions, a survey of farmers showed."

November 13 - Bloomberg: "China's President Hu Jintao told Asia-Pacific business
leaders the world's most populous nation will take 'vigorous' steps to boost
household spending and reduce a reliance on investment and exports for economic
growth. 'Our focus in countering the crisis is to expand domestic demand, especially
consumer demand... We want to 'increase people's ability to spend,' he said."

November 13 - Bloomberg (Shamim Adam): "China is facing the biggest challenge
to its currency policy since the start of the global recession as economists
warn the peg to the dollar risks causing an asset bubble... China's sales of
yuan to keep it fixed to the dollar contributed to a 29% jump in money supply,
and the peg helped spur more than $150 billion in speculative funds from overseas
in the past six months, China International Capital Corp. says. Record apartment
prices and a 74% climb in the benchmark stock index this year are prompting
warnings that the policy is inflating asset prices excessively. 'If China keeps
the peg, it will be powerless to prevent asset bubbles,' says Hu... Greater
China chairman at Goldman Sachs..."

November 9 - Bloomberg: "China's passenger-car sales rose 76% last month...
October sales of cars, sport-utility vehicles and multipurpose vehicles climbed
to 946,400 units... Sales in the first 10 months rose 45.2% from a year earlier
to 8.19 million."

November 11 - Bloomberg: "China's lending growth slowed in October as officials
considered more steps to tighten credit standards and avert asset-price bubbles.
Banks extended 253 billion yuan ($37bn) of new local- currency loans, compared
with 516.7 billion yuan in September... M2... grew a record 29.4% from a year
earlier, the central bank said."

November 11 - Bloomberg: "China's industrial production and trade surplus
climbed in October, indicating a strengthening recovery in the world's third-largest
economy that's likely to amplify calls to let the yuan appreciate... Production
rose 16.1% from a year before, the most since March 2008... Retail sales gained
an annual 16.2% in October... The trade surplus almost doubled from September,
to $24 billion..."

November 9 - Bloomberg: "China's central bank and banking regulator may 'soon'
issue measures to limit the use of debt in real-estate purchases after asset
prices climbed, a Shanghai official said. Regulators may reduce 'leverage ratios,'
Fang Xinghai, the director-general of Shanghai's financial services office,
said... 'I would think that soon you will see these measures coming out of
the central bank and banking regulatory commission.'"

November 9 - Bloomberg: "China, the world's second-largest energy user, will
raise gasoline, diesel and jet fuel prices by as much as 8% tomorrow, the first
increase in more than two months..."

Japan Watch:

November 10 - Bloomberg (Aki Ito): "Japan's current-account surplus unexpectedly
widened in September as worldwide government stimulus spending helped to ease
declines in exports. The surplus rose 0.2% to 1.57 trillion yen ($17.5bn) from
a year earlier..."

November 9 - Bloomberg (Wes Goodman and Cordell Eddings): "Japanese investors
who lived through a decade of deflation and recessions say U.S. Treasuries
are a bargain even with yields at about the lowest levels since at least the
1960s. Japan bought a net $105 billion of U.S. government debt through August,
exceeding China as the biggest foreign buyer and boosting its holdings to $731
billion..."

India Watch:

November 12 - Bloomberg (Kartik Goyal): "India's industrial production grew
more than economists forecast in September, adding to positive economic signs
as policy makers consider when to rein in stimulus measures. Output at factories,
utilities and mines rose 9.1% from a year earlier..."

Asia Bubble Watch:

November 13 - Bloomberg (Christopher Anstey and Michael Dwyer): "The Federal
Reserve's policy of keeping interest rates near zero is fueling a wave of speculative
capital that may cause the next global crisis, Hong Kong's leader said. 'I'm
scared and leaders should look out,' said Donald Tsang, chief executive of
the city, said... 'America is doing exactly what Japan did last time,' he said,
adding that Japan's zero interest rate policy contributed to the 1997 Asian
financial crisis and U.S. mortgage meltdown... 'We have a U.S. dollar carry
trade at the moment,' Tsang, 65, said... 'Where is the money going -- it's
where the problem's going to be: Asia,' Tsang said. 'You can see asset prices
going up, not only in Korea, in Taiwan, in Singapore and in Hong Kong, going
up to levels that are incompatible or inconsistent with the economic fundamentals."

November 9 - Bloomberg (Camila Fontana): "Brazil's current account deficit
may almost double in 2010 and reach the widest since 1998 as a local currency
rally boosts imports amid a consumer-led economic recovery, a central bank
survey shows. The gap will widen to $33.25 billion next year from an estimated
$16.9 billion in 2009, according to the median forecasts from about 100 economists..."

November 12 - Bloomberg (Adriana Brasileiro): "Brazil's integrated electricity
grid leaves it vulnerable to the types of massive outages that occurred this
week when 40% of the country was plunged into darkness, according to a government
energy research agency. 'Brazil has the largest integrated power grid in the
world; it's fantastic because it facilitates electricity transmission between
regions, but the domino effect that happens when we have a problem is a major
inconvenience,' said Mauricio Tolmasquim, president of Brazil's Energy Research
Agency."

Unbalanced Global Economy Watch:

November 13 - Bloomberg (Simone Meier): "The euro-area economy emerged from
its worst recession since World War II in the third quarter as exports from
Germany and France helped compensate for households' reluctance to increase
spending. Gross domestic product in the economy of the 16 nations using the
euro rose 0.4% from the second quarter, when it fell 0.2%..."

November 13 - Bloomberg (Jana Randow): "Germany's economic recovery accelerated
in the third quarter as government stimulus programs fueled company spending
and a rebound in global trade boosted exports. Gross domestic product increased
a seasonally adjusted 0.7% from the second quarter..."

November 10 - Bloomberg (Vibeke Laroi and Marianne Stigset): "Norway's sovereign
wealth fund, the world's second largest, gained a record 13.5% in the third
quarter as stocks rallied on signs the global recession ended."

November 12 - Dow Jones: "Australia reported... an unexpected surge in jobs
last month in the latest sign the country's economy was accelerating quicker
than expected... The unemployment rate, meanwhile, rose slightly to 5.8% from
5.7%..."

U.S. Bubble Economy Watch:

November 12 - Bloomberg (Vincent Del Giudice): "The U.S. budget deficit widened
in October from a year earlier, reaching a record for that month... The excess
of spending over revenue widened to $176.4 billion last month, compared with
a deficit of $155.5 billion in the same month a year earlier... Spending for
October declined 2.7% from the same month a year earlier to $331.7 billion,
and revenue and other income fell 17.9% to $135.3 billion... Individual income
tax collections fell 29% to $61.2 billion in October from a year earlier, and
corporate tax receipts last month were a negative $4.5 billion on the government's
books... Over the past week, the Treasury auctioned a record $81 billion in
its quarterly sales of long-term debt. The Treasury's debt-management director...
told a meeting of bond market participants last week to anticipate another
year of government debt sales of $1.5 trillion to $2 trillion..."

November 13 - Bloomberg (Bob Willis): "The trade deficit in the U.S. widened
in September by the most in a decade, reflecting rising demand for imported
oil and automobiles... The gap grew a larger-than-anticipated 18% to $36.5
billion, the highest level since January... Imports climbed 5.8%, the most
since March 1993, to $168.4 billion. The figures reflected a $4.1 billion increase
in imported oil as the cost of a barrel of crude climbed to the highest level
since October 2008 and volumes also rose... Exports rose 2.9% to $132 billion,
the most this year, propelled by sales of civilian aircraft, industrial machines
and petroleum products."

November 9 - Bloomberg (Sonja Franklin): "Former Federal Reserve Chairman
Alan Greenspan said a rebound in stocks is 're-liquifying' the U.S. economy
and housing prices are showing early indications of ending their decline. 'We
have been very fortunate that the stock markets moved back' and are 're-liquifying
the whole process,' Greenspan said..."

November 12 - Bloomberg (Bob Willis): "Mortgage applications to purchase homes
in the U.S. plunged last week to the lowest level in almost nine years... The
Mortgage Bankers Association's index of applications to buy a house dropped
12% in the week ended Nov. 6..."

November 9 - Bloomberg (Daniel Taub): "The number of U.S. homeowners who owe
more than their properties are worth fell in the third quarter as values stabilized
and some homes were lost to foreclosure, Zillow.com said. About 21% of owners
of mortgaged homes were underwater, down from 23% in the second quarter..."

November 12 - Investment News (Jessica Toonkel Marquez): "In an attempt to
keep a low profile, The Goldman Sachs Group Inc. has told its employees that
it won't be hosting a corporate Christmas party this year. The investment bank
is also prohibiting employees from funding their own parties, an insider at
the firm told InvestmentNews."

Real Estate Watch:

November 12 - Bloomberg (Dan Levy): "U.S. foreclosure filings surpassed 300,000
for an eighth straight month as unemployment made it tougher for homeowners
to pay their bills, RealtyTrac Inc. said. A total of 332,292 properties received
a default or auction notice or were seized by banks in October, up 19% from
a year earlier... RealtyTrac said..."

Central Banker Watch:

November 13 - Bloomberg (Steve Matthews and Mark Deen): "Chicago Federal Reserve
Bank President Charles Evans commented... 'In our most recent policy statement
we said that we expected rates to be low for an extended period of time. We
included different markers that we will be monitoring, in terms of very low
resource utilization, very low inflation. We'll be looking at all of those...
Unless there are unusual developments, I think the policy is going to be highly
accommodative, as it is now, for quite some period of time.'"

Fiscal Watch:

November 12 - New York Times (David Steitfeld): "The Federal Housing Administration
said... that its cash reserves had dwindled dramatically in the last year after
a record drop in home prices... The F.H.A., which insures loans made by private
lenders, guaranteed more than $360 billion in mortgages in the last year, four
times the amount in 2007... 'As a credit expert, I have seen this movie before,
and the ending is always the same,' said Edward Pinto, a former executive with
the government mortgage giant Fannie Mae. The results of the F.H.A.'s annual
audit showed the agency's capital reserves to be 0.53%, far under the 2% minimum
mandated by Congress. A year ago, the capital reserves were 3%... Nearly one
in five loans made in 2007 are seriously delinquent, the agency said."

GSE Watch:

November 7 - Wall Street Journal (Nick Timiraos): "Freddie Mac said it didn't
need any additional federal aid for the second straight quarter as it reported
a loss of $6.3 billion for the third quarter... But the company said it expected
to ask for more handouts from the U.S. Treasury in the future... Together with
Fannie Mae, which said... it would need a $15 billion capital injection, the
tab for the U.S. government's bailout of both mortgage-finance giants has climbed
over the past year to $112 billion, making it one of the costliest government
interventions ever to stabilize housing and financial markets."

Muni Watch:

November 11 - Financial Times (Nicole Bullock): "Some of the same financial
troubles that have pushed California toward economic disaster are wreaking
havoc in nine other states and posing a threat to the nascent recovery, according
to research... 'California's fiscal problems are in a league of their own,'
says Susan Urahn, managing director of the Pew Center on the States... 'but
the Golden State is hardly alone.' Arizona, Florida, Illinois, Michigan, Nevada,
New Jersey, Oregon, Rhode Island and Wisconsin join California as the most
troubled US states... For residents, fiscal problems have meant higher taxes,
layoffs of state workers, longer waits for public services, more crowded classrooms
and less support for the poor."

November 12 - Bloomberg (Darrell Preston): "U.S. states, which are closing
$250 billion of budget deficits, will be forced to grapple with diminished
revenue until at least 2012, a survey of fiscal officials found. The only thing
that kept states from 'draconian' spending cuts has been $135 billion of funding
under President Barack Obama's economic stimulus package, according to a report
from the National Governors Associations and the National Association of State
Budget Officers. Revenue fell 7.5% in fiscal 2009, forcing states to close
budget gaps of $72.7 billion. 'These are the worst numbers we've ever seen,'
said Scott Pattison, executive director of the budget directors group... 'States
have been forced to lay off and furlough employees, raise taxes, drain rainy
day funds and sharply cut state spending.'"

New York Watch:

November 12 - Bloomberg (Ken Prewitt and Michael Quint): "New York legislators
must act quickly to narrow a $10 billion, two-year budget deficit and solve
a December cash squeeze, Governor David Paterson told Bloomberg radio. 'Our
actions have to be taken now, they must be stern, they must be swift,' he said..."

November 11 - Bloomberg (Dan Levy): "Manhattan apartment rents fell as much
as 9% in October from a year earlier... according to Citi- Habitats Inc. Average
rents dropped for all apartment sizes and the vacancy rate rose 0.15 percentage
point to 1.86%, the highest since November 2008..."

California Watch:

November 10 - Bloomberg (Michael Weiss): "California's tax receipts rose $285
million, or 7.1%, from the prior year, Controller John Chiang said... 'October's
receipts are a welcome break from a largely negative trend line for the last
two years,' Chiang said, noting the state's overall cash position was $1.2
billion ahead of state projections."

Speculation Watch:

November 10 - Bloomberg (Bei Hu): "Hedge fund assets may top the previous
$2 trillion high by the end of next year as double-digit average returns lure
investors, said Barry Bausano, Deutsche Bank AG's global co-head of prime finance."

Crude Liquidity Watch:

November 13 - Bloomberg: "Saudi Arabia... has started to expand and upgrade
its oil and gas production and refining business at a cost of $100 billion
to tap rising demand in Asia, Oil Minister Ali al-Naimi said. 'China's and
Asia's demand are projected to be met mainly from supplies from Saudi Arabia
and other Gulf states,' al- Naimi said..."

November 9 - Bloomberg (Zainab Fattah): "Saudi Arabia will face a 'substantial'
housing shortage by 2015 as a growing population and rising employment fuel
demand, Deutsche Bank AG said. The kingdom will require an estimated 1.2 million
additional homes by 2015, compared with a projected supply of just 900,000..."